Inflation: Without the Color Pills The problem with how inflation is presented in the average financial media is that either it’s some strange natural disaster that strikes without warning, or it’s some vindictive plot by the immaterial forces of evil. Either way, there is no value in most media for the average resident of Main Street, USA. No practical steps to take. No encouragement to simply understand and accept the US monetary policy for what it is. Now to be clear, I certainly do have my philosophical and practical arguments against the current monetary system as it stands… It’s just that being angry and scared never did me any good. Think about your own decisions driven by anger and fear. How often were they the right decisions? How often did they do you any good? Instead of despairing, how about some friendly advice and education? Let’s disambiguate some of the terms that are so often thrown around on this topic. 1. Inflation: The rate of price increases, usually measured on an annual basis. 2. Disinflation: The slowing of inflation. 3. Deflation: The rate of price decreases, usually measured on an annual basis. The Federal Reserve is never going to attempt to cause Deflation. Deflation is worse than Inflation according to the current thinking. The only goal is Disinflation when Inflation exceeds too far past 2%. The Federal Reserve will never cause (intentionally) the prices to deflate back down to the level that would return prices to the level they would have been, if they had not lost control. Per the chart I made from BLS data, there has only been one year (2009) where real deflation occurred in the past 50 years. Deflation is not the target. There will not ever, barring massive fiscal reform, be a time when the prices go back down. The actual simple average price increase per year has been 3.76% since 1975, nearly double the official target. Given the observation of the simple “what is” as a “what is” regardless of all other factors, how does this system work, and that by design, what is a reasonable person to do? Buy assets. Restructure your budget. What are you saving in? Food? Clothes? Toiletries? Think I’m kidding? I measure my financial stability in terms of years of daily living commodities I am ahead by. I initially began with soap and deodorant from the local dollar stores. When I first started, the fancy hypoallergenic soap was available in a 3 pack for $1.00 in early 2022. Then it became a two pack. Then the price moved up to $1.25, then single bars, then they were gone. Between the spring of 2022 and the winter of 2024, that’s almost a 400% increase. Sure, it’s a small item, but you shower every day. Beans were an even more extreme example. I noticed the prices going up in April of 2020, I mentally anchored them a $0.69 per slightly more than a pound bag. By October of 2022, they hit a high of $3.50. At least a 5x, and I know they used to be cheaper than the April 2020 prices.